Kuwait calls off Dow Chemical's US$17.4 bln joint venture

29-Dec-08

Kuwait is to call off a deal to form a US$17.4 bln petrochemical joint venture with U.S. company Dow Chemical. Dow Chemicals (DOW.N) and Kuwait Petroleum Corp (KPC) announced a US$19 bln JV in December 2007. KPC's Petrochemical Industries Co (PIC) agreed to pay Dow US$9.5 bln to contribute 5 of the U.S. company's units to the 50-50 joint venture. The value of the deal was lowered by 8% this month to about US$17.4 bln in light of the global financial crisis. Kuwaiti parliamentarians have expressed that the project was not economically viable due to the global financial crisis and slumping petrochemical sales. Four liberal MPs had threatened to question the prime minister over the deal. Moves to question ministers have in the past led to resignations by cabinet members. Additionally, in July, Dow announced plans to acquire its rival Rohm & Haas for US$15.3 bln, and had planned to use the proceeds from the JV to repay a large part of the US$13 billion in debt it will take on once that deal closes in early 2009.